nep-exp New Economics Papers
on Experimental Economics
Issue of 2008‒11‒18
ten papers chosen by
Daniel Houser
George Mason University

  1. Does scarcity exacerbate the tragedy of the commons? Evidence from fishers€٠experimental responses By Maldonado, Jorge H.; Moreno-Sanchez, Rocio del Pilar
  2. Determining Consumer Perceptions of and Willingness to Pay or Appalachian Grass-fed Beef: An Experimental Economics Approach By Evans, Jason R.; Brown, Cheryl; Collins, Alan R.; D'Souza, Gerard E.; Rayburn, Edward B.; Sperow, Mark
  3. Estimating the Effect of the Order of Information Revelation on Purchases: Expectations and Subjective Experience in the Wine Market By Gustafson, Christopher
  4. Common Property, Information, and Cooperation: Commercial Fishing in the Bering Sea By Robert H. Hicks; Alan C. Haynie; Kurt E. Schnier
  5. Estimating Child Time Preferences: Aiding Rural Schools in Improving Human Capital Formation By Jordan, Jeff; Castillio, Marco; Ferraro, Paul J.; Petrie, Regan
  6. External Validity of Hypothetical Surveys and Laboratory Experiments By Chang, Jae Bong; Lusk, Jayson L.; Norwood, F. Bailey
  7. Modeling Yeah- and Nay-Saying to Alternatives in Conjoint Experiments By Hu, Wuyang
  8. Farmers as Producers of Clean Water: Getting Incentive Payments Right and Encouraging Farmer Participation By Collins, Alan R.; Maille, Peter
  9. Health and Environmental Benefits of Reduced Pesticide Use in Uganda: An Experimental Economics Analysis By Bonabana-Wabbi, Jackline; Taylor, Daniel B.
  10. DO MORE EXPENSIVE WINES TASTE BETTER? EVIDENCE FROM A LARGE SAMPLE OF BLIND TASTINGS By Goldstein, Robin; Almenberg, Johan; Dreber, Anna; Emerson, John W.; Herschkowitsch, Alexis; Katz, Jacob

  1. By: Maldonado, Jorge H.; Moreno-Sanchez, Rocio del Pilar
    Abstract: Economic Experimental Games (EEG) have challenged the theoretical prediction showing that individuals balance own and collective interests when making decisions that deviate away from suboptimal Nash equilibrium. However, few studies have analyzed whether these deviations from Nash equilibrium towards social optimum are affected as the stock of resource changes. Performing EEG with real fishers we test the hypothesis that behavior of participants €ӭeasured as relative deviations from Nash equilibrium- differs under a situation of abundance versus a situation of scarcity. The design of our EEG is based on a profit maximization model that incorporates intertemporal effects of aggregated extraction. Our findings show that in a situation of scarcity, players over extract the resource making decisions above the Nash equilibrium, obtaining less profit, mining the others-regarding interest, and exacerbating the tragedy of the commons. This result challenges previous general findings from the EEG literature. When individuals face abundance of the resource, however, they deviate downward from the individualistic and myopic behavior prediction. This phenomenon of private inefficient over exploitation is corrected when management strategies are introduced in the game, which underlines the importance of institutions.
    Keywords: Resource /Energy Economics and Policy,
    Date: 2008
  2. By: Evans, Jason R.; Brown, Cheryl; Collins, Alan R.; D'Souza, Gerard E.; Rayburn, Edward B.; Sperow, Mark
    Abstract: The U.S. market for commoditized beef is a dynamic one that has, over the last 30 years, seen decreases in per capita consumption and an increased reliance on large, integrated feedlot facilities that focus on efficient weight gain and producing carcasses deemed desirable according the USDA quality grading system. Because of the problems inherent in the conventional production system and the existence of farm-to-retail price spreads that do not favor primary cow-calf producers, analyses of alternative beef production and marketing strategies that facilitate enhanced profitability and simultaneously address surging consumer demand for specialty food products are necessary. To that end, focus of the current study was on the market potential for grass-fed beef products in the Appalachian region, given that these products embody observed, experience, nutritional, and process attributes that may appeal to a large consumer base. Specifically, a variant of the Becker-DeGroot-Marschack experimental auction mechanism was employed in grocery stores in Morgantown, WV and Pittsburgh, PA in order to determine consumer preferences and willingness to pay for grass-fed steak and ground beef products. A majority of beef consumers sampled preferred the grass-fed products in both steak and ground beef experiments and were willing to pay a price premium in order to obtain them. It was concluded that consumers would respond positively to the availability of these products in the retail sector, based largely on their superior nutritional content and core observed attributes.
    Keywords: Demand and Price Analysis, Livestock Production/Industries,
    Date: 2008
  3. By: Gustafson, Christopher
    Abstract: Recent research on consumer behavior has indicated that, contrary to most models in economics, information can affect consumers' subjective experience with a good. When consumers receive information about the quality of a good before experiencing the sensory characteristics of the good, the consumers' stated preferences for the goods have been affected. However, a study has yet to examine whether this affects consumers' purchasing decisions, or is limited to stated preference. This field experiment looks at the release of appellation information prior to and after tasting of wine, and uses sales of the two wines tasted as a dependent variable.
    Keywords: Food Consumption/Nutrition/Food Safety, Marketing,
    Date: 2008
  4. By: Robert H. Hicks (Department of Economics, College of William and Mary); Alan C. Haynie (Alaska Fisheries Science Center,National Marine Fisheries Service); Kurt E. Schnier (Department of Economics,Andrew Young School of Policy Studies, Georgia State University)
    Abstract: A substantial theoretical and experimental literature has focused on the conditions under which cooperative behavior among actors providing public goods or extracting common-pool resources arises. The literature identifies the importance of coercion, small groups of actors, or the existence of social norms as conducive to cooperation. This research empirically investigates cooperative behavior in a natural resource extraction industry in which the provision of a public good (bycatch avoidance) in the Alaskan flatfish fishery is essential to the duration of the fishing season, and an information provision mechanism exists to relay information to all individuals. Using a mixed logit model of spatial fishing behavior our results show that conditionally cooperative behavior is prevalent but deteriorates as bycatch constraints tighten.
    Keywords: cooperative games, spatial econometrics, fisheries, location choice
    JEL: Q22 C25 D71
    Date: 2008–11–14
  5. By: Jordan, Jeff; Castillio, Marco; Ferraro, Paul J.; Petrie, Regan
    Abstract: We experimentally investigate the distribution of children's time preferences along gender and racial lines. Black boys have significantly larger discount rates than any other demographic group. Discount rates among Black girls are comparable to rates among White girls. Although White boys exhibit higher discount rates than girls, the difference is small and not statistically significant. These results are robust to alternative measures of patience and to regression analyses that control for socio-economic background and school performance. The measured differences in discount rates are large. All things equal, a Black boy requires expected returns to education 13-15% higher than Black girls to compensate for his larger discounting of future payoffs. Equally importantly, we show that impatience, as measured by discount rates, has a direct effect on behavior. An increase of one standard deviation in the discount rate increases by 5 percent the probability that a child incurs at least 3 school-related disciplinary actions. This result suggests that experiments capture new and relevant information on children. Overall, our results suggests that time preferences might play a large role in setting appropriate incentives for children. Understanding the factors behind these differences in preferences is an important area for future research.
    Keywords: Community/Rural/Urban Development, Labor and Human Capital,
    Date: 2008
  6. By: Chang, Jae Bong; Lusk, Jayson L.; Norwood, F. Bailey
    Abstract: We compare the ability of three preference elicitation methods (hypothetical choices, non-hypothetical choices, and non-hypothetical rankings) and three discrete-choice econometric models (the multinomial logit, the independent availability logit, and the random parameter logit) to predict actual retail shopping behavior in three different product categories (ground beef, wheat flour, and dishwashing liquid). Overall, across all methods, we find a reasonably high level of external validity. Our results suggest that the non-hypothetical elicitation approaches, especially the non-hypothetical ranking, outperformed the hypothetical choice experiment in predicting retail sales. We also find that the random parameter logit can have superior predictive performance, but that the multinomial logit predicts equally well in some circumstances.
    Keywords: contingent valuation, choice experiments, experimental economics, external validity, field experiment, Agribusiness, Consumer/Household Economics, Marketing, Research Methods/ Statistical Methods,
    Date: 2008
  7. By: Hu, Wuyang
    Abstract: Using a series of hurdle choice models, this study considers both nay-saying and yeah-saying to alternatives offered in a conjoint experiment. These behaviors are characterized by respondents persistently choosing the no-choice alternative or choosing at least one of the non-empty options offered in a survey. Results show that jointly consider nay-saying and yeah-saying in a two-hurdle model drastically improves model fit; welfare implications based on hurdle models are also different from those based on models without hurdle specification.
    Keywords: conjoint experiment, hurdle choice model, yeah and nay-saying, Research Methods/ Statistical Methods, D12, C25,
    Date: 2008
  8. By: Collins, Alan R.; Maille, Peter
    Abstract: This research involved a field experiment using watershed payments as an incentive for farmers to address agricultural non-point pollution (ANP). Objectives were to: (1) describe how payments were estimated for a field experiment; (2) explain why a team approach is needed for ANP; (3) discuss the essential elements used for recruitment of farmers into a field experiment setting; and (4) address whether or not farmers were motivated to participate and pursue ANP abatement. One year into the experiment, the results are encouraging. About one-half of farmers who attended meetings are participating. They own or operate approximately 41% of the agricultural land in the watershed. Farmer actions to date have included determining an allocation formula for the payment, requesting watershed wide sampling, and cost sharing of ANP abatement.
    Keywords: field experiment, team approach, agricultural non-point pollution, performance-based incentives, Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2008
  9. By: Bonabana-Wabbi, Jackline; Taylor, Daniel B.
    Abstract: Two experimental procedures were employed to value both health and environmental benefits from reducing pesticide use in Uganda. The first experiment, an incentive compatible auction involved subjects with incomplete information placing bids to avoid consuming potentially contaminated groundnuts/water in a framed field experimental procedure. Three experimental treatments (information, proxy good, and group treatments) were used. Subjects were endowed with a monetary amount (starting capital) equivalent to half the country€ٳ per capita daily income (in small denominations). Two hundred and fifty seven respondents were involved in a total of 35 experimental sessions in Kampala and Iganga districts. The Kampala sample consisted of urban (professional) residents while the Iganga sample consisted of rural (groundnut farmer) residents. Analyses with Tobit models indicated that subjects are willing to pay significant amounts to avoid ill health outcomes, although these values vary by region, by treatment and by socio-economic characteristics. Gender differences were important in explaining bid behavior, with male respondents in both study areas bidding higher to avoid ill health outcomes than females. Consistent with a priori expectation, rural population€ٳ average willingness to pay to avoid ill health outcomes was lower (by 11.4 percent) than the urban population€ٳ willingness to pay perhaps reflecting the poverty level/low incomes in the rural areas and how it translates into reduced regard for health and environmental improvements. Salaried respondents in Kampala were willing to pay more than those on hourly wages. Tests of hypotheses suggested: (i) providing brief information to subjects just prior to the valuation exercise does not influence bid behavior, (ii) subjects are indifferent to the source of contamination: willingness to pay to avoid health outcomes from potentially contaminated water versus groundnuts are not significantly different, and (iii) the classical tendency to free-ride in public goods provision was observed in both urban and rural areas, and this phenomenon was more pronounced in the urban than the rural area. The second experimental procedure, choice experiments, involved 132 urban respondents making repeated choices from a set of scenarios described by attributes of water quality, an environmental good. Water quality was represented by profiles of water safety levels at varying costs. Analysis using a conditional (fixed effects) logit model showed that urban subjects highly discount unsafe drinking water, and were willing to pay less for safe agricultural water, a result not unexpected considering that the urban population is not directly involved in agricultural activities and thus may not value agricultural water quality as much as drinking water quality. It was also found that subjects€٠utility increased with the cost of a water sample (inconsistent with a downward sloping demand curve), suggesting perhaps that they perceived higher cost water to be associated with higher quality water. Advertisements for bottled water in Uganda would have consumers believe that higher cost bottled water is higher quality.
    Keywords: Experimental auctions, Choice experiments, Crop Production/Industries, Environmental Economics and Policy, Health Economics and Policy,
    Date: 2008
  10. By: Goldstein, Robin; Almenberg, Johan; Dreber, Anna; Emerson, John W.; Herschkowitsch, Alexis; Katz, Jacob
    Abstract: Individuals who are unaware of the price do not derive more enjoyment from more expensive wine. In a sample of more than 6,000 blind tastings, we find that the correlation between price and overall rating is small and negative, suggesting that individuals on average enjoy more expensive wines slightly less. For individuals with wine training, however, we find indications of a positive relationship between price and enjoyment. Our results are robust to the inclusion of individual fixed effects, and are not driven by outliers: when omitting the top and bottom deciles of the price distribution, our qualitative results are strengthened, and the statistical significance is improved further. Our results indicate that both the prices of wines and wine recommendations by experts may be poor guides for non-expert wine consumers.
    Keywords: wine quality, wire tasting, wine prices, Demand and Price Analysis,
    Date: 2008–04

This nep-exp issue is ©2008 by Daniel Houser. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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